Raleigh-based Stock Building Supply sets target price for IPO

dbracken@newsobserver.comJuly 30, 2013 

Stock Building Supply reported in a regulatory filing Tuesday that it has targeted selling 8.82 million shares of stock at between $16 and $18 per share in an initial public offering.

The shares the Raleigh-based company intends to sell amount to a 34 percent ownership stake in the business. If the shares fetch $17 per share, the company’s market capitalization – the total value of its outstanding shares – would be $434.9 million.

The company itself is selling half the shares, while the remainder are being sold by The Gores Group, the Los Angeles private equity firm that is Stock’s sole owner. The underwriters also have the option to purchase an additional 1,323,530 shares at the IPO price.

At $17 a share, Stock would receive about $67.5 million after deducting fees and expenses. The company plans to use $58.5 million of the proceeds to pay down debt and another $9 million would be paid to The Gores Group to terminate a management services agreement. Stock had about $100 million in debt at the end of March.

The company’s shares would be traded on the Nasdaq exchange under the ticker symbol STCK.

Stock, founded in 1922 as Carolina Builders, sells windows, doors, roofing and other housing materials. The company is part of a surge of housing-related companies seeking to raise money in the public markets as housing prices rebound.

Stock stumbled badly when the housing market collapsed and demand for its materials evaporated. The company lost $246 million in 2008 before it was rescued by The Gores Group, which invested $75 million in Stock. After a trip into bankruptcy that lasted 57 days, Stock emerged much smaller and more narrowly focused, having exited several dozen markets and shed thousands of jobs.

Stock now operates in 20 metropolitan areas and 13 states that accounted for 48 percent of U.S. single-family home permits last year. The company’s four largest markets are Texas, North Carolina, California and Utah. Stock had 2,460 employees as of the end of last year.

The company posted net losses the past two years – $42.1 million in 2011 and $14.2 million last year – but Stock’s sales have been rising, increasing 24 percent to $942 million last year.

Stock reported in a regulatory filing this week that it expects to turn a profit in the second quarter of this year. It expects net income of between $1.3 million and $2.3 million, compared to a loss of $2.2 million during the same period in 2012.

The company expects net sales of between $313.7 million and $315.3 million in the second quarter, or about 27 percent higher than the same period last year.

Stock attributed the increasing sales to “the improving residential construction market and increased selling prices for lumber and lumber sheet goods.”

Bracken: 919-829-4548

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